Technology Innovation in Banking Industry

The digital technology revolution has changed the way we pretty much do anything these days. Consumers are being provided with new avenues to interact in real time with the providers and banking industry is no exception to that. Every day, we’re seeing new market entrants around the globe and for a financial institution, either small or large it, is critical to invest in innovation labs and make use of emerging/disruptive technologies to stay ahead of the competition.

To put things in perspective, in the financial sector alone, investments in technology have grown exponentially in the past decade – rising from $1.8 billion in 2010 to $19 billion in 2015 – with 73% of these investments focusing on the personal and small business segments. (Source: Whitepaper)

You’re probably wondering why this exponential increase in investments? Why invest billions of dollars in Technology Innovation? This is a simple cause and effect, the effect being “Increased Profit Margins”. But, how are we going to get the effect we desire?

The answer to this question lies in finding the answers to the three “How’s”

1. Optimized business processes – how can I increase productivity while lowering costs
2. Expanding customer base – how many consumers can I reach out to?
3. Increasing customer satisfaction – how happy can I keep them?

What do I need to get the effect I desire?

There are many disruptive technology elements such as Beacon, NFC, Wearable Devices, Facial Recognition, Bio Metric, Heat Map, 3D Augmented Reality, GPS, Mobile Devices, Analytics etc., which can help the banking industry in building innovative solutions to improve sales, customer service, and overall productivity. 

The need of the hour are game changing ideas. Ideas that will forever change how business is done today. Here are a few innovative banking ideas.

Digital Branch: A paperless bank location needing only a third of the traditional office space, minimum man power, and two to three weeks to construct. Another advantage of digital branch is extended hours of real-time 24x7 banking and effective use of man power. A digital branch includes modern tech hardware and software such as OCR, touch-screen devices, and video interfaces for direct communication with a remotely located agent, In addition to regular banking services, digital branches can also be designed to offer financial planning services, applications/form filling services, data download services and printing services to name a few.

Social Network Ecosystem: Imagine a platform where customers and partners can interact with the bank. This guarantees a more intuitive and modern banking experience, thereby helping improve existing customer relationships and attract new customers. This platform can include features like credit transfers via social networks like Twitter and Facebook, social platform lending, and trading in virtual currencies(for example, bitcoins) and many more cutting-edge products and services that go well beyond conventional banking practices.

Customer Improvement Platform: What-if there was a way customer experience could be monitored in real-time using predictive and data mining analytics and use that data to improve quality of service? This would help in efficiently strategizing CRM process. The platform would have the capability to understand “What customers need?” and “What service agents need?” The idea behind this is to simplify customer-agent interactions regardless of the banking channel.

Banking of Things (BoT): It’s a way of connecting all our gadgets, and compatible appliances with the bank account. But why would anybody want to do that? For example, if there’s fraudulent activity on the account, depending on where the customer is and what they are doing, an alert can be sent to show transactional details on their TV or  send a voice alert to their car. A perfect example of this is a very interesting video I was watching the other day. The idea behind this is simple – teach kids to save money in a generation where everything has gone paperless and we rarely use physical money bills. 

Mobile Banking/ATM: It is nothing but a bank on wheels – A wheel continuously tracked by customers. Through a GPS enabled dedicated mobile app, customers can search and locate the nearest mobile bank. We could go as far as to give customers the flexibility to set appointments for banking services provided at their door steps. App alerts are a part of this idea and can used to notify customers of financial services available nearby.

There is growing concern that the banking industry is living on borrowed time. According to Alessandro Hatami, former digital payments and innovation director at UK bank Lloyds, there it’s a possibility that customer based environments like Facebook, Google, and Apple will slowly take customers away from banking institutions if they start pushing financial services to their customer bases.

Subsequently, traditional banking transactions are on the decline, putting pressure on the industry to focus on a more sales-centric environment to offset the operating costs. Demand is greater than ever and steadily increasing at a pace that supply cannot satisfy. The only way to maintain a competitive advantage in an ever increasing competitive environment is to leverage technology and make full use of the resources available out there.  

A decade from now, banking will cease to exist the way it does today. Things will be a lot different and the change is already happening.

Deloitte’s recommendations to the banking industry is to strategically invest in innovation by partnering, hiring, crowdsourcing, and piloting – engaging with different players to develop new solutions across the banking spectrum; and proactively working with regulators in the shaping of standards and protocols around these new technologies.

So, are you ready? Let’s bank like we’ve never banked before!